It might have to do with this...
There is a missing step when setting up PhoneGap for Android on Windows Eclipse (pg.21). It should have this added (from phonegap wiki)...(You might experience an error here, where Eclipse can't find phonegap-1.0.0.jar. In this case, right click on the /libs folder and go to Build Paths/ > Configure Build Paths. Then, in the Libraries tab, add phonegap-1.0.0.jar to the Project. If Eclipse is being temperamental, you might need to refresh (F5) the project once again.)